What You Need to Know About ICV Certificates in the UAE in 2021

What You Need to Know About ICV Certificates in the UAE in 2021

The In-Country Value (ICV) program was launched by ADNOC (Abu Dhabi National Oil Company) for its contractors and suppliers. Over the past couple of years, the Department of Economic Development, Aldar Properties, and the Abu Dhabi Ports have also joined the ICV program, creating a more robust scheme.

By implementing the ICV certificate program, the UAE seeks to grow and diversify its economy through sourcing more goods and services within the UAE. Additionally, the program aims to prioritize creating opportunities for UAE nationals in the private sector and strategically localize critical parts of the value chain for selected categories.

If you are considering applying for an ICV certificate UAE this year, or are curious about how it would benefit your organization, here’s what you need to know about ICV certificates in the UAE in 2021.

[1] What is an ICV certificate?

An ICV certificate demonstrates that a specific supplier or contractor has gone through the process of ICV certification and received a validated ICV score by the independent pre-approved ICV certifiers. The certificate declares an organization’s ICV “achievement” as it represents the total amount that a supplier or contractor spends within the UAE or contributes to the UAE’s economy.

According to a pre-defined methodology, a supplier or contractor’s ICV Score is determined by evaluating the economic value added within the UAE for the goods or services offered by the company. By going through this process, the supplier or contractor in question is able to demonstrate their contribution to the local economy as it includes an explanation concerning how the company delivers the required ICV.

To achieve their proposed goals, the ICV certification process considers goods manufactured, revenue from outside the UAE, Emiratization, investment, and expatriate contribution. The purpose of this certification process is to ensure the legality and accuracy of the information presented by suppliers regarding their ICV contribution.

In all cases, the ICV Certificate is prepared based on the last audited financial statements, which must not be more than two years old from the certification year.

[2] What is the role of the certifying bodies?

In order to implement the ICV program for ADNOC Group Companies, a number of certifying bodies have been selected to perform third-party verification of the numbers in the ICV Certificate. This third-party verification must be conducted on an annual basis.

[3] Who needs an ICV certificate?

All companies operating in Abu Dhabi that seek to apply for governmental and semi-governmental procurements are required to obtain ICV certification. Each legal entity that seeks to participate in tender with ADNOC or any of its group entities should obtain an ICV certificate.

The certification process is open to all businesses and is not limited by company size. Once an organization has obtained their ICV certificate, it is valid for 14 months from the date of issue of the company’s Audited Financial Statements. The organization’s responsibility is to have the revised ICV certificate within two months of the issuance of audited financial statements.

[4] How does an ICV certificate affect contracts?

As the ICV assessment constitutes an essential part of ADNOC’s tender evaluation and award process, there are various benefits that come with obtaining an ICV certificate.

While those who don’t obtain an ICV Certificate can still participate in ADNOC’s group tenders, they will have an ICV score of zero, significantly reducing their overall appeal compared with an organization with an ICV certificate. This, in turn, is likely to lead to non-certified companies losing out on offers and deals. Therefore, it is in the company’s interest to obtain an ICV certificate as soon as possible.

ICV is a cornerstone of ADNOC’s procurement process, and an evaluation has to happen with all awarded contracts.

During the evaluation phase, the company with the highest ICV score would be asked to match the best price. If the company with the highest ICV score is unable to match the price, the organization with the next-best score will be asked, and so forth. Once a contract has been awarded, ADNOC requires the successful bidder to produce an ICV Improvement Plan that demonstrates how they will improve their ICV score.

[4] How do you obtain an ICV certificate?

To obtain an ICV certificate, you must first contact one of the Certifying Bodies (such as MBG Corporate Services) to receive a quote. Once you have selected a Certifying Body, you will sign an Engagement Letter. From there, the Certifying Body will begin their evaluation of your company based on the information you submit through the ICV Certification Template. Depending on their findings, they will determine whether or not a final ICV certificate will be issued to your company.

For this process to work, your company will have to submit an audited financial statement, a list of procured goods and services, and WPS reports.

Whether you are an established business or are starting the process of company setup in the UAE, partnering with a reputable corporate services company is the best way to ensure that all aspects of the business are under control.